Bartels v. Hennessey Bros., Inc.

• Decision Date: 14 January 1969
• Docket Number: No. 53159,53159
• Citation: 164 N.W.2d 87
• Court: Iowa Supreme Court
• Parties: Russell H. BARTELS and Edward Chester, Appellees, v. HENNESSEY BROTHERS, INC., Defendant-Appellant, M. J. Hennessey Construction Company, Defendant-Appellee.

Page 87

164 N.W.2d 87

Russell H. BARTELS and Edward Chester, Appellees, v. HENNESSEY BROTHERS, INC., Defendant-Appellant, M. J. Hennessey Construction Company, Defendant-Appellee.

No. 53159.

Supreme Court of Iowa.

Jan. 14, 1969.

Thomas H. Pirnie, of Barnes, Wadsworth, Elderkin, Locher & Pirnie, Cedar Rapids, for appellant.

James R. Snyder, of Simmons, Perrine, Albright & Ellwood, Cedar Rapids, for appellees.

A. F. Craig, Jr., Independence, for defendant-appellee.

RAWLINGS, Justice.

In quiet title action plaintiffs, Russell H. Bartels and Edward Chester, as subsequent grantees, alleged a prior deed from M. J. Hennessey Construction Company, grantor, to Hennessey Brothers, Inc., first grantee, having been corrected as to property description prior to final indexing and recording, without re-execution, re-acknowledgment and re-delivery, was a nullity and thereby accorded them no constructive notice.

Upon the basis of stipulated facts, trial court quieted title in plaintiffs, and defendant Hennessey Brothers, Inc. appeals. We reverse.

For convenience, Bartels and Chester will hereafter be referred to as plaintiffs or second grantees; Hennessey Brothers, Inc. as defendant-appellant or first grantee; and M. J. Hennessey Construction Company as defendant-appellee or common grantor.

These are the agreed facts:

'1. That on February 9, 1966, M. J. Hennessey Construction Company executed a warranty deed for a valuable consideration to Hennessey Brothers, Inc., said deed conveying lots 7, 8, 9, and 10 in Bell's Addition to the City of Cedar Rapids, Iowa, to Hennessey Brothers, Inc.; that the said warranty deed was filed and indexed in the office of the County Recorder of Linn County, Iowa, on February 10, 1966; * * * that M. J. Hennessey Construction Company owned Lots 1, 3, 4, 5 in Bell's Addition to the City of Cedar Rapids, Iowa, but not Lots 7, 8, 9, 10 in Bell's Addition to the City of Cedar Rapids, Iowa, on February 9, 1966.

'2. That the Linn County Recorder, pursuant to Sections 558.57 and 558.58 of the Iowa Code, before recording the deed, delivered it to the Linn County Auditor to be entered on the transfer books; that the Linn County Auditor then notified Hennessey Brothers, Inc., the grantee, that M. J. Hennessey Construction Company did not own the lots described in the warranty deed, but owned Lots 1, 3, 4 and 5 in Bell's Addition to the City of Cedar Rapids, Iowa; that on February 16, 1966, the lot numbers on the said deed were changed from Lots 7, 8, 9 and 10 to Lots 1, 3, 4 and 5 by either an employee of the Linn County Auditor's office or an employee of Hennessey Brothers, Inc., the grantee (said employee not being an officer or director of Hennessey Brothers, Inc.); that Lots 7, 8, 9 and 10 were x-ed out on the deed and Lots 1, 3, 4 and 5 typed in above the x-ed out portion; that the said office employee of Hennessey Brothers, Inc., the grantee placed his initials, H.H.L., and the date 2--16--66, on the deed opposite where the change was made.

'3. That the said deed was not re-executed, re-acknowledged or re-delivered at the time the change was made nor at any time thereafter; that notice of the change in the deed was not given to M. J. Hennessey, President of M. J. Hennessey Construction Company, or to Charlotte M. Hennessey, Secretary of M. J. Hennessey Construction Company, the persons who executed the warranty deed on behalf of M. J. Hennessey Construction Company, nor to any officer or director of the said corporation; that prior to the change being made, an officer of Hennessey Brothers, Inc., the grantee, conferred with William T. Connery, an attorney for M. J. Hennessey Construction Company and the scrivener of the deed and the said attorney instructed the officer of Hennessey Brothers, Inc. to have the lot numbers changed on the deed to conform the deed to the intent of the parties, which was to describe in the deed four lots in Bell's Addition to the City of Cedar Rapids, Iowa, owned by M. J. Hennessey Construction Company.

'4. That subsequent to the time that the change was made, the Linn County Auditor entered the transfer of Lots 1, 3, 4 and 5 in the transfer books, index book and plat book pursuant to Sections 558.60--558.64 of the Iowa Code; that subsequently the deed was returned to the office of the Linn County Recorder where the index was changed to reflect the change in the lot numbers and the deed was recorded; * * *.

'5. That on May 31, 1967, M. J. Hennessey Construction Company executed and delivered a warranty deed conveying Lots 3, 4, and 5, Bell's Addition to the City of Cedar Rapids, Iowa, to plaintiffs Russell H. Bartels and Edward Chester for a valuable consideration; that Russell H. Bartels and Edward Chester had no actual knowledge of the prior instrument to the same property to Hennessey Brothers, Inc.; that the said deed was filed for record on June 1, 1967, Vol. 1333, page 533.'

The record discloses the original stipulation contained a marginal note opposite paragraph 3, supra, which states: 'M. J. Hennessey Construction Co. does not stipulate to this. A. F. Craig, Jr.'

Accompanying the aforesaid marginal notation is a bracket indicating the following facts were not agreed to by defendant-appellee: '(T)hat prior to the change being made, an officer of Hennessey Brothers, Inc., the grantee, conferred with William T. Connery, an attorney for M. J. Hennessey Construction Company and the scrivener of the deed, and the said attorney instructed the officer of Hennessey Brothers, Inc. to have the lot numbers changed on the deed to conform the deed to the intent of the parties, which was to describe in the deed four lots in Bell's Addition to the City of Cedar Rapids, Iowa, owned by M. J. Hennessey Construction Company.'

Trial court found the first deed between defendant-appellee, common grantor, and defendant-appellant, first grantee, having been materially altered by purporting to convey property other than that described in the original deed, was, in effect, a different instrument, which constituted a cloud on plaintiffs' title, and ordered it removed. Inferentially this must mean trial court found the first deed did not impart constructive notice to plaintiffs even though indexed and recorded as corrected.

In support of trial court's ruling plaintiffs argue that in order for a lawfully recorded deed to impart constructive notice, it must be properly acknowledged; if an instrument is invalidly acknowledged it cannot be lawfully recorded; and if recorded it does not afford constructive notice to third parties.

Stated otherwise, second grantees take the position, changing of the property description was a material alteration which required the deed be re-acknowledged before it could be lawfully recorded; and if recorded without such re-acknowledgment, the recordation does not serve to impart constructive notice to subsequent purchasers without actual notice.

On the other hand, defendant-appellant appeals claiming, where an Erroneous description in a deed is corrected in the auditor's office after notice from him to the grantee, pursuant to section 558.67, quoted infra, and the auditor completes the transfer under the corrected description, the recorder accordingly revises his index, and the deed is recorded in its amended form, constructive notice is imparted by such indexing and recording, without need for any re-execution, re-acknowledgment and re-delivery.

In other words, defendant-appellant argues, when a correction of description is made in a deed pursuant to section 558.67 and the instrument is then indexed and recorded as corrected, a new instrument is not essential in order to impart constructive notice. See Marshall, 'Iowa Title Opinions and Standards', chapter 2, and especially section 2.1(I), page 49, note 26.

I. A quiet title action stands in equity which means our review is de novo. Jeffrey v. Grosvenor, Iowa, 157 N.W.2d 114, 122.

II. This case, as aforesaid, was submitted on an agreed stipulation of facts, no party hereto having presented any other evidence, either contradictory or explanatory.

Touching on that subject we said in Burnett v. Poage, 239 Iowa 31, 39, 29 N.W.2d 431, 435; 'Stipulations and agreements of settlement are favored by the court and are valid and binding.'

They should also be construed in light of the pleadings. Norman v. Dougan, 201 Iowa 923, 927, 208 N.W. 366, and 50 Am.Jur., Stipulations, section 8, page 609.

And, subject to limitations respecting propriety, applicable statutes, or court rules, an agreement as to facts, entered into between parties to a judicial proceeding, is ordinarily binding upon those who make them. 83 C.J.S. Stipulations § 13, page 31, and 50 Am.Jur., Stipulations, section 9, page 610.

However, a stipulation admitting certain designated facts does not relieve a party of the necessity of proving facts not admitted, either expressly or by implication, which are essential to a valid cause of action, Or defense. 83 C.J.S. Stipulations § 24(3), page 63.

Moreover, courts are ordinarily bound by and must enforce stipulations as to matters and facts which may be validly agreed upon, but is not precluded from adopting findings of fact inferentially established though not specifically determined by a factual stipulation. 83 C.J.S. Stipulations § 17, page 37. But see In re Estate of Rorem, 245 Iowa 1125, 1143, 66 N.W.2d 292, 47 A.L.R.2d 1089.

Here defendant-appellee, refused to stipulate William Connery, attorney, ever authorized first grantee to make the subject property description correction, but presented no counter-stipulation or other evidence in that regard. See 83 C.J.S. Stipulations § 24(3), page 63.

Furthermore, first grantee and second grantees did stipulate and agree William Connery, attorney for common grantor and scrivener of the deed to first grantee, authorized first grantee to effect the property description correction and these parties are accordingly bound.

Also, absent...